All of us want to see our communities prosper in the future. It not only enhances our own quality of life, it also creates the opportunities that keep our kids and grandkids around (even with five teenagers, I still regard that as a good thing).
There is, however, widespread disagreement on the best way to go about achieving that aim. The issue is how to balance the need for economic expansion with the corresponding challenges of increasing congestion, eroding environmental quality, and potentially widening gaps in income. There is no magic answer, but a recent study sheds some useful light on the subject. In particular, it ranks the top ten factors in site selection from a very reliable source, the companies that actually chose a location in the recent past and those in the process of making a selection at the moment.
This “from the horse’s mouth” information reveals, first of all, that the workforce is the most important factor, with the related category of education and training availability not far behind. Demographic patterns have blessed Texas with an abundant labor pool, but our training leaves something to be desired. While we have many outstanding educational institutions, we lag behind in several key training and income categories. With the untimely death of our Smart Jobs program, it is imperative that we create a new job-training mechanism that will match up to others around the country.
Additional areas which recorded high marks were availability of facilities, utilities, overall business climate, transportation, and access to markets and suppliers. No big surprises here, and Texas generally stacks up well. We have a good transportation system, although growth and inadequate funding are posing notable challenges for the future. New and innovative approaches, such as the Trans Texas Corridor, are being implemented to address these concerns. Our business climate is well regarded in most respects; we have abundant electric power supplies, competitive rates, and a retail competition plan that is the envy of the country. Our supplier and market access is exceptional, and we are aggressively addressing key environmental concerns.
The eighth item on the list was incentives. The fact that they rank so low led many to claim they were not important at all. That claim is, quite simply, wrong. Incentives, as much as I don’t like them in principle, are absolutely crucial in the final stages of most site selections these days. The point of the rankings is that if a community is not a desirable place to work, with the attributes a business needs, it will never make the “short list” and, thus, never have a chance to even talk about incentives. The first key to success for any area is to develop a local workforce, infrastructure, and business climate that encourages firms to invest locally. The second key is to be able to compete effectively for the opportunities that will then come your way. Like it or not, that means incentives.
Another issue along these lines is the use of economic development funds. Hundreds of Texas communities have voted to tax themselves in order to have the needed funds to promote long-term growth. As budgets have tightened over the past year, however, all too many cities have dipped into these funds for basic municipal services. This practice undermines the purpose for which the legislature set up this opportunity, and literally threatens the entire pool (several hundred million dollars per year) of locally-controlled funds which are essential to competition. If we are to remain in the game, we must play by the rules.
In short (something I know a lot about), make your community a strong place to live and work, marshal you resources for economic development, and use them appropriately and wisely. In shorter, do it right!